Propublica on Facebook

Recommended Books

First Do No Harm ... to the Shareholders

The Patient as Profit Center

By CARL GINSBURG

Nothing you are about to read will change at all no matter what Congress and the President finally agree to do in the never-ending circus of health care reform. A stratified system where privilege rules, and others wait, stays in place, unscathed. Primary doctors will not increase, nor will preventive care, nor will government assistance as envisioned by President Obama make a meaningful difference in the lives of anyone. Most doctors want nothing to do with Medicaid patients—indigent or otherwise. You see, in the end, doctors decide who they see.

They see dollars, lots of them. Take the example of the nation’s nephrologists – kidney specialists – who have made millions of dollars on patients in an on-going scandal of profiteering, ethical lapses and outrageous indifference.

In 1973, the US government stepped in on the side of patients suffering from End Stage Renal Disease—that’s when your kidneys stop doing the job. It’s an awful condition, often brought on by hypertension, diabetes and other illnesses related to the preventable stress and strain of modern living. Loss of kidney function occurs predominantly among poor, urban populations. The only way to stay alive, short of getting a new kidney, for which there are long waiting lists, is to go on kidney dialysis, a cumbersome process whereby a patient goes to clinic three times a week for 3-4 hours per session and has his blood cleaned mechanically.

Medicare picks up the tab for this life-saving process. In 2007, the government spent $8.6 billion for dialysis and with projections of kidney failure going up, patients on dialysis are expected to reach 400,000 in the next few years, money spent – and made – in this field is enormous and growing.

Health care is a profit center and it didn’t take a Harvard MBA – actually, a number of Harvard MBA’s did in fact run this scheme– very long to see the potential. Health entrepreneurs began approaching nephrologists across the country in the 1980s with offers to purchase their practices and many doctors happily agreed. With practices of 70-100 patients per doctor and Wall Street setting a price of about $70,000 per patient, nephrologists got checks in the $5 to $7 million dollar range. For what, exactly? For promising to send their patients to clinics now owned by for-profit clinic systems. And that wasn’t the end of it. Doctors also got directorships and other consulting deals for handing over their patients. Doctors just needed to agree to the protocols of the corporate dialysis company – the standing orders governing dialysis procedures and drugs. Remember, nothing in medicine gets done without a doctor’s prescription, so there needs to be enduring cooperation between the dialysis corporation and the MD.

As more and more nephrology practices were bought up, two players came to dominate the field—the DaVita Corporation, a Fortune 500 company based in Denver, and Fresenius Corporation, headquartered in Hamburg, Germany. Today, these two companies control more than 70 percent of the US dialysis market, making billions of dollars annually. The CEO of DaVita has banked hundreds of millions in bonus money. “We created this giant money machine that made a lot of nephrologists and entrepreneurs rich,” economist Stuart Altman told USA Today last month.

Making rich is doing right by shareholders, and nice for the nephrologists who sold their patients, but the reality is that dialysis in the US is the worst in the industrial world, with the highest death rates (21% of patients die each year, which means a dialysis patient lives five years on average) lowest quality and highest expense around. Across the board, from the hiring of unskilled technicians, re-use of equipment including the key dialyzer component, poor needle and other supply quality, machine repair, cleanliness, water preparation…. the for-profits brought the standards down. Patients who complain are summarily ejected from clinics, only to have Medicare cower when patients look to them for help.

Some doctors, actually just a relative few, backed out of the deals made to sell patients to the for profits, as they took offense at the substitution of their medical instructions for those of the corporation. Suits were filed, settled and sealed. Ah, American justice—not a peep.

And there is of course the pharmaceutical angle. One drug, epogen, a hormone that stimulates red-blood cell growth, has earned the Amgen Corporation billions of dollars since it was released in 1989. It is very expensive and very much in use in the dialysis field, where accusations of overuse are being investigated. No other industrial country uses such large dosages of epogen on its dialysis patients due to expense and concerns that too much can actually harm the dialysis patient. Epogen is the single largest drug cost for Medicare.

The only way to make sense of the US health care system, and to fashion some measure of meaningful reform, is to unravel the patient as profit center. Too bad the Administration didn’t get it right from the start.